"Take a close look at the track record of this company, and you'll see that we have gambled in markets traditionally regarded as 'non-profit,'" says corrupt executive Dick Jones in the original RoboCop, one of my favorite movies. "Hospitals. Prisons. Space exploration... I say good business is where you find it."
That quote has been running through my mind a lot lately. Because objectively, nobody gambles bigger than Elon Musk. And his biggest bet yet, financing and powering the reelection bid of former President Donald Trump, is already paying off in unprecedented ways. He has certainly found good business in politics, as well as all the other things he's bet on, like electric cars and space travel.
So where does it go next and what does it mean for Tesla? That's the focus of today's Critical Materials, our morning roundup of auto industry and tech news. Be sure and subscribe in the link below for updates as it's coming to your inbox soon.
Most of our team is off for Veterans Day in the U.S., and so InsideEVs offers a sincere thank-you to all who served. But we still have more news and features coming your way today. Also on deck for our roundup: China's car industry is up again. Does it have a shot in the Trump 47 era?
30%: Musk Already Reaps The Benefits Of A Trump Win
It's hard to put into words just how unprecedented this all is.
In the past few days alone, we've gotten widespread reports that Tesla's CEO is sitting in on Trump's calls with world leaders like Ukraine's Volodymyr Zelenskyy and weighing in on key White House staffing decisions. He's been staying at Trump's Mar-a-Lago Club in Florida and apparently helping to game out what's next. If even the most seasoned Musk-ologist and Tesla watcher had this situation on their dance card, they're certainly smarter than I am.
(Also, apparently, they went golfing together, and I simply cannot picture Elon Musk golfing. Does he golf? Does he have to at this point? He didn't wear the khakis and the polo shirt and the glove and the whole deal, right? I'm not even sure the best AI can come up with that image.)
Under normal circumstances, such a publicly close relationship between an incoming president and the world's richest man—also one of America's biggest defense contractors—would be the subject of considerable public outrage. But the barometer for public outrage may need to be recalculated entirely these days; after all, nobody seemed to bat an eye at the fact that after Trump's win, Tesla shot back to a $1 trillion market capitalization.
It's important to understand why that's happening. There's the obvious, surface-level "cozy relationship" between the Trump Administration and Musk that could assuredly benefit Tesla, but what does that mean? Well, with Trump vowing to remake the federal government in his own image and dispose of the investigations and prosecutions he's the subject of, it does stand to reason that a version of this could happen for Tesla too. That's how I read the more "favorable regulatory environment" for Tesla.
Remember, Tesla has also gambled hard on autonomy and self-driving cars, and a few months ago that seemed like a bet that could've killed the company. Tesla still faces a number of safety investigations into Autopilot and Full Self-Driving (including one that opened just three weeks ago) as well as lawsuits and, perhaps more critically, a Department of Justice probe that could involve securities and wire fraud.
So now, the question is: what if Trump works to make all of that just go away? We know Musk wants to dictate terms on federal-level regulations for autonomous vehicles (which, to be fair, this space has needed for more than a decade.) But if a transformed federal government can erase the investigations and legal hurdles facing Tesla, the only limit it could face for delivering truly self-driving cars is the technology itself. And clearly, that's what Musk wants.
Granted, this is all contingent on the Trump-Musk partnership staying solid, and that is far from guaranteed. But don't be surprised if some, or all, of the roadblocks Telsa once faced somehow go away in 2025.
As with everything Trump and Musk, we won't know until we know. But don't say I didn't warn you.
60%: Every Automaker Is 'War-Rooming' Right Now
Meanwhile, what nobody seems to be talking about is how this Musk-Trump partnership might be good for electric vehicles, more broadly. If Trump does kill the Inflation Reduction Act's EV tax credits—or worse, the manufacturing incentives—it puts Tesla back in the position it was in back in 2021 or 2022: not the only name in the electric race, but the one that's the furthest along.
We'll have much more to say this week on What Now?, which is the $300 billion question facing an American auto industry that reoriented itself for an electric future driven by targets and regulations that may soon cease to exist. And since we have little in the way of concrete plans from Trump yet, or who he will tap to execute them, we can only game things out. From Automotive News:
“Virtually every OEM that’s selling in the U.S. market is war-rooming right now,” said Michael Robinet, executive director of automotive consulting at S&P Global Mobility. “Now that they’ve got a more discernible direction of what the administration may or may not do, they are focusing their efforts and taking a look at their portfolio.”
Trump, a supporter of fossil fuel and limited environmental regulation, takes over at a crucial juncture in the transition to electric vehicles. Companies have invested hundreds of billions of dollars to develop a domestic EV supply chain, and automakers are racing to comply with existing emissions standards favoring zero-emission vehicles while also meeting customer demand for gasoline-powered and hybrid vehicles.
The Trump administration will likely reconsider the EPA’s vehicle emissions standards and California’s ban on new vehicles powered by gasoline, industry experts said.
The EPA standards mandate an industrywide average target of 85 grams of carbon dioxide per mile by the 2032 model year for light vehicles, representing a nearly 50 percent reduction in average emission target levels from the 2026 model year. The EPA determined the final rule with industry input after automakers and suppliers argued that the initial proposal was overly stringent.
Then again, the U.S. must ask: do we want to be competitive globally or not? But even a heavily Republican Congress won't want to kill the many jobs coming to their states that were driven by the Inflation Reduction Act's incentives:
The heart of the Inflation Reduction Act will likely remain intact, said Kate Kalutkiewicz, senior managing director at McLarty Associates’ trade practice. Still, “there are any number of implementation rules that come from the federal government that [Trump] could pause or undo or rewrite,” she said.
The legislation has encouraged companies to invest $211 billion in 510 EV assembly and component production facilities, according to Atlas Public Policy’s EV Jobs Hub dashboard. Both the Biden administration and the incoming Trump administration value U.S. manufacturing, but Trump will likely take a hard look at how the IRA is funded and could slash or eliminate consumer tax credits, Robinet said.
“Trump wants the U.S. to be competitive globally,” Kalutkiewicz said. “He’s very consistent in wanting the U.S. to be manufacturing goods for export. So it wouldn’t make sense if he tried to undermine EV production in the U.S.”
Section 45X, a manufacturing incentive that provides credits for certain products, including key battery components domestically produced and sold by a manufacturer, will likely continue because of the many EV assembly and parts plants in Republican-controlled states and jurisdictions, she said.
That’s why the legislation has “very strong defenders in Congress,” Kalutkiewicz said.
We won't know until we know. But as cynical as this sounds, every C-suite auto industry executive really ought to be scheduling some golfing time at Mar-a-Lago right now unless they want to see billions of dollars lit on fire.
90%: China's Auto Sector Roars Back. Is America On The Roadmap Now?
Coincidentally, InsideEVs' own Kevin Williams is back in China right now testing more of the advanced and increasingly ultra-affordable electric cars that could stand to upend the rest of the global industry. Stay tuned; he's coming back with a lot to say.
And what's interesting is that after a year of slowing sales, consolidation and wider economic woes, China's auto sector seems to be coming back hard. Here's the Wall Street Journal with more:
Chinese car sales rose sharply in October, thanks to government subsidies and robust demand during the National Day holiday period.
Retail sales of passenger cars rose 11.3% to 2.26 million units in October compared with a year earlier, and were up 7.2% from September, the China Passenger Car Association said Friday. October was one of the best months ever in China’s auto market in terms of sales, production and exports, the association said.
How the U.S. deals with China's auto industry will be another key challenge for Trump. He stuck tariffs on cars from that country; Biden greatly expanded them. And while Trump can hardly be called a friend of China, he once floated during the campaign trail that their automakers should build cars here.
We haven't heard much about that in months (and indeed, it may have been some throwaway line in a speech and not a key policy position) but I haven't forgotten about it. The Information didn't, either.
Here's what one analyst told that publication:
If Trump follows through on that invitation, he would be making a 180-degree departure from Biden’s EV policy, which has effectively blocked Chinese-made EVs and discouraged the import of Chinese-made batteries. Trump would likely face substantial opposition from Detroit’s Big Three: Chinese-made EVs, particularly those from Byd, the country’s leading car manufacturer, are often more advanced and cheaper than those of rival Western models. Virtually no one in the industry thinks any Western automaker, with the exception of Tesla, is prepared to compete head-to-head with their Chinese rivals.
[...] Trump’s apparent openness to Chinese EV production in the U.S. stems in part from his aversion to feeling taken advantage of. He made the invitation in response to reports that Chinese carmakers might build production plants in Mexico so they could export the EVs to the U.S tariff-free under the U.S.-Mexico-Canada Agreement.
[Nick Loris, vice president of public policy at C3 Solutions an energy policy think tank] said an open door to Chinese cars could become part of a grand trade agreement between Trump and Chinese leader Xi Jinping.
“The grand bargaining negotiations certainly need to take the consumers into mind, too,” Loris said. “One of the biggest issues of the election was the lingering effects of inflation. Tariffs and restrictions on necessary imports, including batteries and electric vehicles, are only going to increase costs for consumers, and for negligible national security benefits.”
I'd be stunned at that outcome. But given the increasing level of participation between the Western automakers and Chinese ones, and the fact that tariffs alone won't hold China back forever, maybe it's plausible.
100%: What's The Path Forward For Tesla, And China, In The Trump 47 Era?
Like I said: more to come on the "What Now?" question. But what's your read on all of the above?
Contact the author: patrick.george@insideevs.com
